USDA Capitulates to Native American Farmers; Settles for $760 Million

The scenario is all too familiar: A corporation or government agency, having knuckled under to a group of “civil rights” activists and their lawyers, renders itself an easy target for successful copycat shakedowns. The U.S. Department of Agriculture (USDA) for over a decade has epitomized such capitulation. And once again it has come through. On October 19 the department announced the settlement of a longstanding lawsuit in which thousands of American Indian farmers and ranchers had claimed discrimination by USDA credit program administrators. The $760 million agreement, which gained preliminary court approval yesterday, follows the agency’s capitulation earlier this year in separate lawsuits filed by black and Hispanic farmers. Taxpayers will be stuck with the bill.

The case at hand is known as Keepseagle v. Vilsack. Brought forth over a decade ago by a married couple and joined by nearly 900 Native American farmers and ranchers – the number eventually would expand to tens of thousands – the suit claimed that USDA during 1981-99 denied credit to Indians based on their ancestry. As a result, unsuccessful applicants, unable to pay off debts, often lost part or all of their land. The nominal defendant, Agriculture Secretary Tom Vilsack, true to form, was contrite without getting specific: “Today’s settlement can never undo wrongs that Native Americans may have experienced in past decades, but combined with the actions we at USDA are taking to address such wrongs, the settlement will provide some measure of relief to those alleging discrimination. The Obama administration is committed to closing the chapter on an unfortunate civil rights history at USDA and working to ensure our customers and employees are treated justly and equally.” President Obama likewise called the resolution “an important step forward in remedying USDA’s unfortunate civil rights history.”

That’s the official story. Upon closer inspection, this lawsuit, like similar ones filed by black, Hispanic and female farmers, merits far less sympathy than headlines would suggest. It rests on the implicit assumption that a mere claim of racial or sexual discrimination suffices as proof. Yet the plaintiffs, here as elsewhere, introduced no hard evidence that a whole class of persons had been singled out for denial of credit. Apparently, the plaintiffs reasoned, if blacks could get a piece of the action, so should Indians. This is an extension of the mentality that low rates of residential mortgage approval must be due to lender prejudice, not borrower creditworthiness.

National Legal and Policy Center several times this year has explained why the original “black farmer” lawsuit, known formally as Pigford v. Glickman, was based on unsubstantiated and often fraudulent claims of discrimination. The lead plaintiff, North Carolina black farmer Timothy Pigford, previously had sued Agriculture Department only to have his action dismissed “with prejudice” (i.e., his case was so weak that the court barred him from filing subsequent suits alleging the same claims). Notwithstanding, plaintiffs’ attorneys attracted thousands of new plaintiffs, winning them class-action status and blanket mediation rights. The big payday came in April 1999. Lawyers for the plaintiffs and the USDA agreed to a settlement that to date has enabled more than 15,000 black farmers, armed with dubious or nonexistent claims of discrimination, to receive a combined more than $1 billion (see www.pigfordmonitor.org/stats).

Were this not enough, the plaintiffs’ lawyers convinced a federal judge that more relief would be needed to compensate aggrieved parties who supposedly were unable to file prior to the deadline. That case, known as Pigford v. Vilsack, or simply Pigford II, resulted in a settlement announced by the USDA this February for $1.25 billion. Congress in May 2008 already had set aside $100 million for this purpose, though funds have yet to be released. Agriculture Secretary Vilsack, along with President Obama and Attorney General Eric Holder, are determined to pressure lawmakers into appropriating the remaining $1.15 billion. Yet the case is so shaky that three members of Congress late this September held a press conference to demand that the Justice Department probe the validity of claims under Pigford II before any money is released.

The original suit, meanwhile, had triggered similar actions by other supposedly aggrieved classes of plaintiffs. In 2000, a group of Hispanic farmers, in a case now known as Garcia v. Vilsack, filed suit against the USDA, demanding compensation for past discrimination under farm aid programs. Prodding by the Obama Justice Department won class-action status for this case as well, combining the case with another longstanding copycat suit, Love v. Vilsack, which alleged USDA discrimination against female farmers. In Garcia, like Pigford, the plaintiffs cited no cases of outright discrimination. No matter – a guilt-stricken USDA this past May offered $1.33 billion to settle. The plaintiffs’ lead attorney, Stephen Hill, quickly denounced the offer as far too low, arguing that since Hispanic farmers outnumber black farmers, they deserve more money. Apparently, evidence of actual wrongdoing doesn’t enter into the equation.

The settlement announced two weeks ago in Keepseagle v. Vilsack should be understood in the context of this legal hothouse. The lead plaintiffs, George and Marilyn Keepseagle, a Sioux couple from Fort Yates, North Dakota near Bismarck, had sued (or is it Siouxed?) the Department of Agriculture in November 1999 so they could hold on to their ranch. Under threat of foreclosure, the couple sold 380 acres to make a payment on a loan that the USDA refused to renegotiate. Relegated to back burner status was the possibility that the Keepseagles’ default might have been due to poor business practices or insufficient credit history. Despite the department had not kept records of loan denials prior to 1989, the suit demanded relief for acts dating back to 1981. Even the USDA is tentative about the facts – note Secretary Vilsack’s telling phrase, “may have experienced,” in referring to plaintiffs’ claims of discrimination.

As for specific of the settlement, unveiled in U.S. District Court for the District of Columbia before Judge Emmet Sullivan, the USDA will make available up to $680 million in damages to thousands of Native American and forgive up to $80 million in outstanding farm loans. Grand total: $760 million. Damages will be awarded through the kind of two-track arrangement specified in the original Pigford settlement. Additionally, the court-enforced pact will require the department to provide various services to Indian farmers that amount to affirmative action. These measures include a new 15-member advisory agency, the Native American Farmer and Rancher Council, to monitor progress. Eleven members would be Indians or representatives of Indian interests and the other four would be top USDA officials. In addition, the USDA also will create 10 to 15 regional offices providing education and technical assistance to Native American farmers, ranchers and advocates; systematically review farm loan policies so as to better benefit Native Americans; and create an Office of the Ombudsperson to address concerns of all “socially disadvantaged” farmers and ranchers.

The settlement, in other words, is an egalitarian windfall. Lawyers for the plaintiffs, predictably, are all smiles. “The settlement marks a major turning point in the important relationship between Native Americans, our Nation’s first farmers and ranchers, and the USDA,” remarked lead attorney Joseph Sellers, partner at the Washington, D.C. litigation firm of Cohen, Milstein Sellers & Toll. “After three decades, Native Americans farmers and ranchers will receive the justice they deserve, and the USDA has committed to improving the farm loan system in ways that will aid Native Americans for generations to come.” Plaintiffs’ co-counsel David Frantz, a partner at Conlon, Frantz & Phelan, rhapsodized over the new 15-member oversight council: “While the damage awards and debt relief are vital elements of this settlement, the Native American Farmer and Rancher Council will help ensure that the reforms to USDA’s programs are lasting and that USDA honors the civil rights of Native Americans for years to come.” Translation: “We’ll be watching you.”

Taxpayers, directly or indirectly, will subsidize this gambit. And there can be little doubt that more lawsuits in this vein will come. Civil rights litigators are skilled in the art of “discovering” discrimination, even if the evidence is purely circumstantial. The abuse of the legal system by those claiming high moral dudgeon has been a key factor driving the rapid expansion of government at all levels. Advocates of limited government must fight this ongoing stealth reparations program, however hard the accusations of “racism” and “bigotry” may rain. In absence of such a commitment, all the Tea Party rallies in the world will amount to little more than feel-good populist gestures.